Chinese messaging giant WeChat recently unveiled its 2016 data report, shedding some light on the wallet’s usage and engagement among its massive number of active users. The firm’s data on “red packets,” its peer-to-peer (P2P) payments offering, points to just how dominant the wallet is in the country.

WeChat counts 768 million daily active users, a figure that’s likely slightly larger on a weekly or monthly basis. For context, that’s 55% of China’s total population. Of those users, roughly 300 million have added payment information to the wallet, based on estimates from earlier this year.

Users send considerable money via the platform. Over 2.35 billion “red packets” were sent on Chinese New Year, marking an all-time high. But on average, users send 28 packets per month, spending 580 yuan ($83) on P2P in the app. That means that up to roughly $299 billion could have been transacted through the wallet in 2016 alone.

The firm’s data provides further evidence of WeChat Pay’s dominance in the P2P space. WeChat and Alipay, the mobile wallet affiliated with e-commerce giant Alibaba, comprise 90% of China’s nonbank mobile wallet ecosystem. And though both wallets are large, WeChat lags behind Alipay for all functionalities except for P2P. As Alipay’s share of the ecosystem is slipping slightly and WeChat’s is rising, WeChat’s data could point to just how far Alipay has to come in the P2P space, which is becoming more popular in China, in order to surpass the wallet or grab some additional market share.

The U.S. payments ecosystem is in the midst of a shift toward mobile, and countless new and old stakeholders are attempting to accelerate this migration, which is moving at a glacial pace relative to other markets globally. But mobile payments can rise to the mainstream. For companies seeking to build out a robust mobile payments product, China's thriving mobile payments ecosystem offers some insight — and some lessons.

Total mobile payments volume in China will reach $6.3 trillion by 2020, according to our estimates based on iResearch data. This marks a healthy 33% five-year compound annual growth rate (CAGR). In comparison, the U.S. will generate $154 billion in mobile payments volume this year by our estimates, which amounts to just 6.5% of China's mobile payments volume.

Even accounting for population discrepancies, China will generate over $1,700 in mobile payments volume per capita in 2016, compared with $475 in the U.S., based on forecasts from BI Intelligence and eMarketer. China's advantage will eventually diminish, but it will still produce around twice as much volume per capita in 2020.

China has unique factors buoying the industry, like the dominance of mobile phones, a lack of legacy infrastructure, and the surging popularity of digital retail marketplaces. Some of the characteristics behind the country's success can be mimicked, or even replicated to some extent, in other markets like the U.S. However, one fundamental barrier in the U.S. is that it's being forced to layer mobile payments on top of an existing payments system, and the ecosystem is very fragmented.

China claims the world's largest mobile payments market and serves as the global benchmark for other markets to pursue.China will process a whopping $6.3 trillion in total mobile payments by 2020, according to our estimates based on iResearch data. This marks a healthy 33% five-year compound annual growth rate (CAGR).

It dwarfs the U.S.' mobile payments industry.The US will generate $154 billion in mobile payments volume this year by our estimates, which equates to just 6.5% of China's mobile payments volume.Meanwhile, China will generate over $1,700 in mobile payments volume per capita in 2016, compared with $475 in the U.S., based on forecasts from BI Intelligence and eMarketer.

Mobile commerce, a lack of legacy infrastructure, and marketplaces have fueled China's enormous success.Consumers in China are much more comfortable shopping on their mobile phones compared with their counterparts in the U.S., and the devices face less resistance from other legacy payments methods like credit cards. The open approach to mobile shopping has been fortified by Alibaba, a Goliath-sized marketplace, and WeChat, a go-to messaging platform, which support Alipay and Tenpay, respectively.

Overviews the key competitors in China's mobile payments market, and how new entrants may shuffle the hierarchy of dominant players.

Uncovers the key drivers propelling China's mobile payments market.

Identifies which drivers the U.S. can import from China, and which barriers may be standing in the way.

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